Inventory Shrinkage Calculator
Calculate how much inventory shrinkage is costing your business and compare it to the industry benchmark.
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What Is Inventory Shrinkage?
Inventory shrinkage is the loss of products between the point of purchase from a supplier and the point of sale to a customer. It reduces your actual inventory below what your records show.
- Theft: Both employee theft and shoplifting account for the majority of retail shrinkage.
- Vendor fraud: Products not delivered as invoiced, short shipments, or substitutions.
- Administrative errors: Mis-scanned items, pricing errors, paperwork mistakes.
- Damage: Products damaged in transit, storage, or handling that cannot be sold.
The industry benchmark for shrinkage is approximately 1.5% of gross sales, according to the National Retail Federation. Anything above this threshold represents an opportunity to improve inventory control processes.
For Amazon FBA sellers, shrinkage may also include products lost or damaged at Amazon's fulfillment centers — Amazon provides reimbursement claims for these losses.